Getting a Home Equity Line of Credit

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One of the more in vogue home equity choices available today is the home equity line of credit. By using the equity in your home you can borrow a certain amount of money that for all intents and purposes is set aside for you to use as needed. With a line of credit you will not receive the entire loan amount in one lump sum, but you will be able to write checks against that credit line when and where you need to. Consolidating credit card debt, remodeling your home, or paying for college are all ways one can use this type of home equity loan.Home equity lines of credit come with a variety of interest rates and re-payment options. You can get a more conventional fixed rate loan that offers monthly payments or you can go the balloon route. Just be careful of lines of credit with balloon payments at the end, having that large payment sneak up on you unawares can be a real budget buster. There are some loans which require a balloon payment at the start of the loan, which can be cost prohibitive, but if you have the money it can keep the remainder of the payments easier to fit into your budget.Before you commit to getting this type of loan be sure to compare any and all offers you may have received and make sure that your monthly budget will not be overly affected by the monthly payment. Read over all documents closely and be sure to question anything that doesn’t make sense. Because you will be offering your home as collateral it is important that you adequately protect that investment. No loan is worth losing your house over.Also keep in mind that different home equity lines of credit have different ways in which you can access the money as well as minimum and maximum withdrawal limits. Some lines of credit will allow you to write checks while others may use a debit/credit card system. Be sure to choose the system that will work best for what you need the money for.The most important aspect of just about any home equity line of credit is the interest rate. These can vary depending on the lender and your credit score. Since the interest rate will determine the amount of money you will above the principal owed it is important to get as low a rate as you can find. You can also get a lower interest rate by paying points up front, but unless you have a good chunk of cash available this may not be easy to do.Closing costs are another aspect of a home equity loan you need to be aware of. There is such fierce competition among lenders these days that they try and keep these costs as minimal as possible. They will also roll these costs into the loan keeping you from having to come up with several thousand dollars up front.A home equity line of credit can be a great way to leverage to equity in your home on an as needed basis. It can give you an amazing amount of flexibility when it comes to paying down debt, buying a new car or remodeling your home.

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